The pitch continues: Ads are “real time,” and so are analytics–you can see how ads are performing second-by-second.

Twitter will start with Twitter.com search. That’s phase one. The plan will roll out more broadly, but the company is doing it this way because it wants a “thoughtful, user-centric approach” to figuring it out. “We will quickly expand into syndication…all of our syndication partners.” And here, Costolo specifically mentions UberTwitter in the list of partners.

Important: Twitter will definitely expand into the regular timeline at some point. That is, you will be getting ads in your stream whether you search or not. Ad-free Twitter is over.

Costolo talks about the “resonance” metric Twitter will use to figure out which promoted tweets show up and where.

Each ad partner will see a scoreboard with different metrics: Retweets, @replies, #tag click, avatar clicks, link clicks, views after RT.

Advertisers won’t pay for ads that don’t resonate with users.

Next, Costolo describes communication on Twitter as both “one to many” and as a “real-time interest graph.”

Pricing will start as CPM. Twitter is doing this because it doesn’t know how to correlate “resonance” with value yet. As the company figures this out, it will move to a pricing model based on ROI.

Here comes Porter Gale, VP of marketing for Virgin America, a launch partner. She notes that @jack is flying VA right now.

[You’re not missing anything here.]

Um, here’s a free ad for two-for-one tickets on Virgin. Don’t really follow it but sure you can figure it out if you’d like.

And here’s Ellen Stone, SVP of marketing at Bravo.

She is also excited!

[You’re not missing anything here, either.]

Stone describes some sort of live, real-time convergence between shows broadcast and users’ tweets. Makes my head hurt. Hope it doesn’t pop up during “Top Chef.”

Back to Costolo: More monetization coming. Commercial accounts coming after promoted tweets will “feather into this platform very very nicely.” One dashboard will manage both products.

Q&A

Will tweets be syndicated to Google (GOOG), Yahoo (YHOO), and other partners that take the stream?
Costolo says yes, without mentioning any specific search engine or media pub.

Will there be revenue-sharing with publishers and bloggers?
Yes, with developers and publishers. Costolo says Twitter will talk about this at its Chirp conference and focus on the syndication piece there. Revenue sharing will be “very transparent,” he adds.

Early reaction from consumers?
Yes, Twitter is getting a “wait and see,” Costolo notes. [From whom? Who’s seen it?] The company will take its “learnings” from search and go forward. Twitter ads should be live and running now.

What CPM are you charging?
Twitter is playing around with different numbers, trying to figure it out. When a term is owned or created by a client, like Virgin America, should it have “rights” to that hashtag, whereby no one can outbid it? Some hashtags only have value at certain times. Like “Super Bowl,” which is only useful for a couple hours in the year. So we have to play around and test different kinds of pricing. “We don’t know the answer to that yet.”

What kind of reactions are you looking for from users?
Costolo says Twitter is looking to see whether people click or interact with ads and paying attention to the tenor of reaction: Positive or negative, etc. Think about the iPad launch this month. People were having battery issues. Someone could have jumped in in real time and bought a promoted tweet that dealt with that. Twitter’s hope is that when people see these, they’ll get why they work.

Please talk about search volume.
“Massive. It’s huge.” Will talk about hashtags tomorrow. But on Twitter.com, it’s a small piece of traffic. So we’re not maximizing revenue now. We’re figuring it out.

How will location work with ads?
“We think significantly.” There are lots of opportunities down the road. As this gets more sophisticated, will see opps for small and big business.

Will marketers be able to get resonance scores for companies that aren’t using promoted tweets?
Not at first. But possibly.

Will you share revenue with TweetDeck, etc.?
Yes. We’ll talk about this tomorrow so we can save something for those guys. Revenue-sharing will be very transparent. Costolo name-checks Iain Dodsworth of TweetDeck and Loïc Le Meur at Seesmic.

Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work

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